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- Take Jeremys total utility information in Exercise 6.1, and use the marginal utility approach to confirm the choice of phone minutes and round trips that maximize Jeremys utility.Suppose that MUx = 10 and MUy = 20. Further suppose that the consumer’s budgetconstraint can be expressed as 20x + 10y = 400. For this consumer, the optimal amount of good x to buy would be a) 5. b) 0. c) 20. d) 40.Assume that you have a budget of Taka 4000 that can spend on two goods like: coke and burger. Suppose coke costs Taka 100 per unit and burger costs 400 per unit. Suppose also that your utility function is given by the equation U(B, C) = 20BC. Write your budget equation. What combination of coke and burger should you buy to maximize utility?
- A consumer has $100 and would like to purchase food (F) and gas (G). Suppose their utility is given by: U (F, G) = F 0.8G0.2 . a) Find the consumer’s optimal consumption bundle give prices pF and pG for food and gas, respectively. b) Which good do you think the consumer likes more, and why? What the consumer might does with their budget.A person in an economy in which they only consumetwo commodities, coffee and cake. This person always consumes thesecommodities together in a fixed ratio; whenever they drink a cup of coffee, they eat a single cake.This person has a budget of £99 to spend on coffee and cake.a. Draw a single diagram showing the relevant indifference curves and budgetlines for this person to show their optimal consumption bundle for the threedifferent examples of prices for coffee and cake listed below. Put thequantity of coffee on the horizontal axis of your diagram. Fully label yourdiagram, identifying the quantities of coffee and cake for the three optimalconsumption bundles. i. Price of coffee is £2 and the price of a cake is £1 ii. Price of coffee is £8 and the price of a cake is £1 iii. Price of coffee is £10 and the price of a cake is £1Suppose a consumer has income of dollars 20 which to be spent on good B and A. Good B cost dollar 4 and good A cost dollar 2 ,then A. Determine budget equation? B.draw budget line?
- Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, S, and the number of times she goes dancing per month, T, is U(S + T) = 2ST, so Mus = 2T and Mut = 2S. It costs Linda $50 to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $500 to spend on shoes and dancing What is the equation for her budget line? Draw it (with T on the vertical axis), and label the slope and intercepts. What is Linda’s marginal rate of substitution? Explain. Use math to solve for her optimal bundle. Show how to determine this bundle in a diagram using indifference curves and a budget lineVijaya spends Rs. 150 per month on coffee and buns at the cafeteria. A cup of coffee costs Rs. 15 and a bun costs Rs. 10. a) Write the equation for Vijaya’s cafeteria budget constraint. b) Assume that Vijaya never drinks coffee without eating one bun, and never eats buns without drinking coffee. How much of each will she consume? c) What do we call goods that are always consumed in the same proportion?Linda loves buying shoes and going out to dance. Her utility function for pairs of shoes, S, and the number of times she goes dancing per month, T, is U(S,T) = 2ST, so MUs = 2T and MUT = 2S. It costs Linda $50 to buy a new pair of shoes or to spend an evening out dancing. Assume that she has $500 to spend on shoes and dancing. A. What is the equation for her budget line? Draw it (with T on the vertical axis) and label the slope and intercepts. B. What is Linda's marginal rate of substitution? Explain. C. Use math to solve for her optimal bundle. Show how to determine this bundle in a diagram using indifference curves and a budget line.
- A consumer’s budget set for two goods (X and Y) is 500 ≥ 4X + 5Y.a. The budget set is illustrated below. What are the values of A and B? The horizontal axis is labeled Good X. The vertical axis is labeled Good Y. A line begins at a point on the vertical axis goes down to the right and ends at a point on the horizontal axis. A = B = b. Does the budget set change if the prices of both goods double and the consumer’s income also doubles? multiple choice Yes, it rotates clockwise Yes, it shifts out from the origin Yes, it shifts in toward the origin No, it does not change c. Given the equation for the budget set, what are the prices of the two goods?Good X: $ Good Y: $ What is the consumer’s income? $Susan has the option to purchase eyeglasses, E, $3 each, and orange juice, O, $1each. Her income is $24.i. Draw the budget line, with eyeglasses on the vertical axis, and orangejuice on the horizontal axis, and compute the values of the intercepts. [Vani eats only green eggs and ham. He has an income of $36. Green eggs have a price of Priceof Green eggs = $2 and ham has a price of Price of Ham = $6. Sam’s preferences are represented bythe utility functionUtility = 10Eggs + 40Hama) Draw vani's budget constraint